Physical Oil Trading Opportunity
Hello,
I work in a good corporate finance role (strategy/corp dev/fp&a) in an unrelated industry for a mid-cap company. I am ~4 years out of school.
I know a VP at a mid-size independent refiner/marketer and he recently asked me if I would be interested in a risk/market ops role on their supply and trading floor. He knows that I have had an interest in O&G and so he reached out to me when they had a position open up. Assume comp would be about flat to my current role.
I wanted to open it up to the board and see if anyone had any thoughts. It's not BP/Shell and it's a trading support role so really no guarantee of a physical trading role down the line. It's also really switching careers since my roles up till now have been solely finance/strategy.
On the other hand, the company is very good, and very profitable with great market positioning. They have a solid stable of traders from very good backgrounds and it could be my only real opportunity to switch careers into physical trading before I am too experienced. I am interested in O&G and I am have been a high performer in all my jobs up to this point, so I think I would have a decent shot at taking a junior trading spot at some point. I also know that even support roles in physical trading don't open up that often so I want to give this a serious look.
But it's still a tough decision to make a jump from a "safe" career path where you are doing well, to a brand new track in a totally different industry.
if you want it do it....but also be prepared to recognize what you are giving up. Starting over at the bottom is tough, and you will get minimal credit for the prior work you have done in your current role. Not saying it won't be worth it, but it can be a real kick in the nuts some days. The hardest thing for me was being right on the verge of a senior level role to heading back to the beginning.
Billsyall if you don't mind me asking what do you do now and what did you do before?
now I am a senior analyst for a physical natural gas trader...previously i was a specialty insurance underwriter.
The role itself sounds promising, trading support/ops exp is essential before even considering a trading role and even if it was BP/Shell the same process with no guarantee of trading would apply.
It seems from your post this is a Q of your affection for risk taking which is actually quite nice - are you risk-on or risk-off?
You would swap a safe, comfortable and fairly well paid role with minimal risk exposure - to a role that ultimately is focused on managing and taking risk, and in turn making or losing money. You've performed well in one environment, how would you fare in this type of environment?
Definitely read a few of the threads on here about what the actual job entails - physical trading is quite niche and has it's idiosyncrasies, there is a big sales/origination and customer relationship aspect to it which seems to be overlooked a bit at times on this forum.
I'm someone who is actually making a switch to a supermajor from a trading support role elsewhere. The move to trading in our current environment is something I think about a lot.
No lie, it is a grind to trading physical oil these days. This is not the late 2000s when you had kids coming out of MBA programs and quickly stepping into trading roles to "trade the basis". This is a career that now requires solid operational knowledge in order to make your way up. At some gas trading shops (some of the biggest) I know (good) schedulers who have waited 5+ years for a move to trading, and there is a line behind them of others. There is a very real chance these days of becoming a career ops person so take that into account and see if you could be happy rising up those ranks as well.
You need to be committed to this grind and realize there are no guarantees for moving into trading. Quite a lot of opportunity costs so you need to love the biz. It's also important that you realize that most jobs aren't near as glorious as they sound on the vast internet rumor echo-chamber. It's a lot of operational work, relationship management, wheeling and dealing. As the head gas trader at a name-brand firm once told me, "trading isn't rocket science", but he also told me "these days it's so competitive you need some edge, these days it comes from deep operational knowledge".
You're right about opportunities like this not opening up super often and if this is the path you really want, this is the only way to do it. Reinventing yourself is nothing unusual and 4 years out of school may be a good time to do it, before you get in too deep and get Golden Handcuffed to a life you never truly wanted.
PM me and we can discuss more specifics and realistic future career potential, if you feel like sharing.
This sounds like an excellent opportunity -- as was previously mentioned above, aside from a few shops (P66/Shell/BP) most places don't have a structured trader development program and prefer to develop their people by putting them in an operational and analytic role within the greater commercial organization.
In your case it would be prudent to take a position in risk and then over the course of the next year or so attempt to cycle into a scheduling role. This will give you an excellent understanding of how VaR works and what kinds of metrics traders typically look at when entering a position on the risk side. On the scheduling side, you'll begin to develop rapport with your counter-parties and acquire a strong understanding of the logistics of your particular product including transportation routes and fees as well as negotiations for transportation capacity. After acquiring the above experiences over the course of the next 2-3 years you will have a strong case for the commercial organization to move you into a trading role. Remember -- this is trading and there is a certain level of aggression and drive needed in order to make material career moves... if you let people walk all over you you'll end up being a scheduler for 15 years... some folks dig that, but if the end goal is trading you're going to have to be outgoing and make your intentions known, you'll also need to add an extra measure of enthusiasm and diligence to your work meaning coming in earlier leaving later and not making mistakes.
Congrats on being offered a role like that, and welcome to the commodities biz. You'd be crazy not to take that gig.
Thanks for all this info.
One question, when physical traders are running paper books on the side, are they ever running a true portfolio or just one off positions?
I never understood you're a pure 1-2 product commodity paper trader (say at a fund) how you manage AUM. Are you really allocating all of your say $100mm of capital to just a few variations of flat price & spread trades in the 1-2 commodities or am I missing something about how risky that is?
with your finance/strategy background, you ever consider taking the job as a step into the O&G industry and then going for risk management role? Might align more closely with what you have done in the past...just a thought.
Piggy backing off of this... given your background you could also opt for a role in Oil & Gas corporate development.. this is often seen as a pipeline into senior executive roles and ultimately the c-suite
From a guy in the business, I would jump on this and not look back
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